Market Roundup
- Eurozone business activity stagnates
- Oil gains on a surprise drop in U.S. crude inventories
- ECB keeps policy unchanged
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 1,000 to a seasonally adjusted 215,000 for the week ended Oct. 18, while continuing claims for the week ended Oct. 1113 is expected to decline to 1.675 million from previous week's reading of 1.679 million.
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have decreased 0.8 percent in September after rising 0.2 percent in August, while non-defense capital goods orders excluding aircraft are likely to have declined 0.2 percent after falling 0.4 percent the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of October. The index posted a final reading of 51.1 in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 51.1 in October after printing a final reading of 50.9 in September.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of October. The index posted a final reading of 51.0 in the prior month.
- (1000 ET/1400 GMT) The U.S. new single-family home sales are expected to have declined 0.7 percent to a seasonally adjusted annual rate of 701,000 million in September. New home sales dropped 7.1 percent in August to a seasonally adjusted annual rate of 713,000 million.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 18.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of October. The indicator stood at 11 in the previous month.
- N/A U.S. reports its monthly budget statement for the month of September. The government posted a deficit of $200 billion in the previous month
Key Events Ahead
- (1900 ET/2300 GMT) Federal Reserve Bank of New York president John C. Williams gives a speech
FX Beat
DXY: The dollar index consolidated within narrow ranges as market participants await U.S. manufacturing numbers due later to gauge the health of the economy and the U.S. central bank policy meeting for clues on its interest rate trajectory. The greenback against a basket of currencies traded up at 97.50, having touched a low of 97.14 on Friday, its lowest since August 9.
EUR/USD: The euro declined after data showed Eurozone business activity stagnated in October as demand withered. IHS Markit’s flash composite PMI came in at 50.2, just above September’s more than six-year low final reading of 50.1, but close to the 50 mark that separates growth from contraction and below expectations for 50.3. The European currency traded down at 1.1126, having touched a high of 1.1179 on Monday, its highest since August 14. Immediate resistance is located at 1.1150, a break above targets 1.1190. On the downside, support is seen at 1.1101, a break below could drag it below 1.1086 (10-DMA).
USD/JPY: The dollar eased from a 1-week peak as investors await the U.S. Federal Reserve’s meeting on Oct. 29 and 30, where it is expected to reduce its benchmark interest rate for a third consecutive time this year. The major was trading down at 108.63, having hit a low of 108.24 on Wednesday, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, durable goods orders, new home sales and Markit prelim PMI's. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.03 (October 14), a break below could take it near at 107.65.
GBP/USD: Sterling tumbled as investors awaited the European Union’s decision on whether to grant Britain a Brexit extension and for how long. The major traded 0.1 percent lower at 1.2898, having hit a low of 1.2841 on Wednesday, it’s lowest since October 18. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2977, a break above could take it near 1.3019. On the downside, support is seen at 1.2800, a break below targets 1.2748. Against the euro, the pound was trading 0.1 percent down at 86.26 pence, having hit a high of 85.74 last week, it’s highest since May 8.
USD/CHF: The Swiss franc plunged, extending losses for the fourth straight session as traders awaited U.S. Vice President Mike Pence’s speech later in the day, after his strong criticism of China in a speech in October last year escalated bilateral tensions. The major trades up at 0.9904, having touched a low of 0.9839 on Friday, it’s lowest since September 5. On the higher side, near-term resistance is around 0.9921 (10-DMA) and any break above will take the pair to the next level till 0.9946. The near-term support is around 0.9828, and any close below that level will drag it till 0.9799.
Equities Recap
European shares advanced, as risk sentiment improved following upbeat results from German companies.
The pan-European STOXX 600 index advanced 0.6 percent at 397.63 points, while the FTSEurofirst 300 rallied 0.6 percent to 1,559.83 points.
Britain's FTSE 100 trades 0.8 percent up at 7,318.90 points, while mid-cap FTSE 250 surged 0.05 to 20,181.47 points.
Germany's DAX rose 0.6 percent at 12,875.23 points; France's CAC 40 trades 0.5 percent higher at 5,681.93 points.
Commodities Recap
Crude oil prices surged boosted a surprise decline in U.S. crude inventories and the prospect of further action by OPEC and its allies to support the market. International benchmark Brent crude was trading 0.2 percent up at $61.15 per barrel by 1200 GMT, having hit a high of $61.27 the day before, its highest since September 30. U.S. West Texas Intermediate was trading 0.1 percent higher at $55.93 a barrel, after rising as high as $56.04 on Wednesday, its highest since September 30.
Gold prices declined as investors waited for clarity on Brexit after the European Union delayed a decision on granting an extension to Britain. Spot gold was trading lower at $1,491.21 per ounce by 1202 GMT, having touched a low of $1,480.73 on Tuesday, its lowest since October 16. U.S. gold futures were flat at $1,495.70 per ounce.
Treasuries Recap
The U.S. Treasuries steadied during the afternoon session ahead of the country’s weekly initial jobless claims data, scheduled to be released today by 12:30GMT and the 7-year auction, also due to be held today by 17:00GMT. Besides, Federal Open Market Committee (FOMC) member Williams’ speech, also due later today shall provide further insights to the debt market. The yield on the benchmark 10-year Treasury yield remained flat at 1.757 percent, the super-long 30-year bond yield hovered around 2.243 percent and the yield on the short-term 2-year too remained stuck range-bound at 1.576 percent.
The United Kingdom’s gilts remained flat during European trading hours amid a muted session that witnessed data of little economic significance as Brexit politics continues to dominate financial markets. The yield on the benchmark 10-year gilts, hovered around 0.682 percent, the 30-year yield remained flat at 1.186 percent and the yield on the short-term 2-year traded tad down at 0.518 percent.
The German bunds slipped during European session after the country’s manufacturing PMI for the month of October disappointed market expectations ahead of the European Central Bank’s (ECB) monetary policy meeting, scheduled to be held today by 11:45GMT shall provide further direction to the debt market. The German 10-year bond yield, which move inversely to its price, surged 2 basis points to -0.377 percent, the yield on 30-year note also gained 3 basis points to 0.112 percent while the yield on short-term 2-year traded nearly flat at -0.664 percent.
